Utility billing – the best results start with the right questions

During our engagements with utility clients, we often ask, “How confident are you that your organization is billing customers correctly, every time?” In most cases, we find that our clients recognize there is room for improvement. The massive volume of utility billing transactions and all the intricacies of metering systems and rate schedules, paired with human nature, make it a safe bet that occasional billing errors will occur.

Despite the odds, the ability to say that you believe your system is 100% correct, 100% of the time is a worthy goal. Conducting a systems analysis and operational review is one of the most cost-effective ways to improve utility billing operations' accuracy and efficiency.

Where to begin?

When embarking on utility billing improvement efforts, one strategy to consider is a walk-through of the entire process, from the meter to cash register, to help identify the typical billing error risks in each segment and the controls you have over those risks.

Metering

Accurate utility billing requires the collection of accurate information through meters. Following are four questions to ask at this stage:

1. Are meters accurate, tested regularly and sized properly for each customer’s usage?
2. Does your organization follow a systematic and well-documented process for adding new customers?
3. Does your organization adhere to a system to check for unusual usage levels and theft of services?
4. Does your organization periodically review customers who fall outside of a reasonable usage range?

Meter reading and billing

Inconsistencies at the meter reading and billing stage can be costly and difficult to pinpoint. Here are four critical questions to ask at this stage:

1. Do you follow a systematic process for establishing new accounts in your billing system?
2. Have you established a process for checking representative samples of customer billings?
3. How do you verify the accuracy of customer classifications?
4. Do you precisely adhere to your various rate schedules?

Cash collections

Limiting errors and removing opportunities for fraud during the cash collections stage should be a priority for all utilities. Below are four critical questions to ask at this stage:

1. Are accounts reviewed routinely for delinquency, and is prompt action taken to recover the charges on a timely basis?
2. Are penalties and interest evaluated where allowable by law on delinquent accounts?
3. Does your organization have policies and procedures governing cash collection activities?
4. Does your organization have dedicated collections staff?

Finally, Baker Tilly advises clients to ask the following questions to identify gaps in technology, current systems capabilities, efficiencies and controls:

1. Can your organization better leverage your existing technology?
2. Is it worth exploring investment in new technology to drive efficiency and accuracy? 
3. Does your staffing model align with your business needs?
4. Are your policies and procedures in compliance with federal, state and local laws?  

For more information on this topic, or to learn how Baker Tilly’s energy and utility specialists can help, contact our team.